UIDAI’s (Aadhaar) Public Policy Innovations: What to outsource and what to keep?

Mr. Ram Sewak Sharma, one of the key persons behind the Aadhaar card has a paper. He goes through the thinking behind setting up and running of UIDAI, the government body behind Aadhaar.

The success of the UIDAI in performing the difficult task assigned to it offers us much food for thought.

Perhaps the first lesson we can draw from it is that innovation is indeed possible within the government. It is possible to achieve both scale and speed, even for a body acting within the constraints of government systems. Government processes need not prevent it from taking bold decisions. In fact, practices commonly used within the government, such as the use of expert committees, and the emphasis on consensus-based decision making, can provide methods to examine difficult issues in a credible manner….

The example of UIDAI also helps us rethink the functions that should be housed within the government and the functions that could be performed outside it. The UIDAI could have created a bureaucratic behemoth with permanent employees all across the country, registering people and capturing their biometrics; instead, it created a very lean organisation and outsourced many functions to private agencies. It was able to do this outsourcing only because of the high quality of its procurement processes. The UIDAI contracted out many large functions, and the bidding, selection and project execution for these happened largely without controversy. If such high-quality procurement skills were available to other departments, it is possible that many other functions that are currently performed by the government could be done better outside it.

UIDAI also shows us that scale and complexity need not be a disadvantage, and that sometimes they can be used to the benefit of the project. Many projects run by the central or state governments in India are very large. This scale makes them attractive to private firms. They may be willing to provide their services to these projects at a low cost either because they can amortise their fixed costs over a very large base, or because they feel that they can leverage their participation in that project to get projects in other parts of India or other parts of the world.

Another lesson government agencies could learn from the UIDAI is its willingness to conduct empirical trials to gather more knowledge. Once a large-scale program is in place, bureaucratic inertia can make changes difficult, and the effects of incorrect assumptions and poor program design can become impossible to rectify. Instead, such schemes could be preceded by a few small pilots, designed to answer questions such as: does this program work? under which circumstances? how can we change processes or programs to maximise the chances of success?